India’s Maritime Amrit Kaal Vision 2047 aims for top-5 global shipbuilding status, with ambitious targets of 4.5 million GT output by 2037 and ship ownership scaling to 100 million GT. Backed by a massive ₹44,700 crore package including the Shipbuilding Financial Assistance Scheme (SBFAS), the policy promises to turbocharge domestic yards. Yet for small electric and hybrid boats—the backbone of inland waterways decarbonization and coastal innovation—SBFAS delivers a bitter pill: subsidy slashed from a flat 20% to 15%, erasing the green premium and treating batteries like diesel engines. This is policy regression at its worst, explaining why innovation stalls in India.
Policy Evolution: From Exclusion to Fragile Embrace
The original Shipbuilding Financial Assistance Policy (SBFAP, 2016 [1]) focused on ocean-going vessels over 24 meters, with declining rates: 20% (2016–19), 17% (2019–22), 14% (2022–25), and 11% (2025–26). Small boats and electrics were largely sidelined.
Enter Aditya, India’s first class-approved solar-electric ferry, launched in 2017 on Kerala waterways. Despite its promise, policy vacuum persisted. Years of advocacy—consultations with NITI Aayog, Ministry of Heavy Industries (FAME EV scheme), Ministry of New and Renewable Energy (solar land based support), and Ministry of Ports, Shipping & Waterways—culminated in the August 2023 SBFAP amendment [2]. Breakthroughs included:
- Flat 20% for electric/hybrid propulsion (overriding declining rates).
- 30% for green fuels like methanol, ammonia, hydrogen.
- Length minimum dropped to 12m, capturing most electric boats.
This unlocked projects, aligning with IMO’s net-zero 2050 goals. Electric boats finally had a fighting chance against cheaper diesel imports.
SBFAS 2025: The Green Subsidy Cliff
Fast-forward to September 2025: Cabinet approves SBFAS under the National Shipbuilding Mission (valid to 2036)[3]. Electric/hybrid vessels are rightly classified as “Specialized” in Schedule-II (“Green Vessels: electric batteries; Hybrid: conventional + batteries”). But Schedule-IV’s slab structure guts the incentive:
- Specialized rate: 15% on first ₹100 crore + 25% on excess.
- All electric boats (typically ₹20–80 Cr) get 15% effective—identical to diesel, no green uplift.
Contracts signed Sep 2025–Mar 2026 can opt for SBFAP’s 20%, but post-2026 approvals default to SBFAS. Policymakers signal: green tech gets no special treatment anymore.
Why This Hurts Innovation and Climate Goals
- MSME Yards Crushed: Small shipbuilders in Kerala, Goa, and Gujarat specialize in <₹100 Cr ferries/tugs. A 5% subsidy drop (₹1–4 Cr per boat) tips economics toward diesel, killing EV adoption.
- Inland Waterways Stagnate: 90% of India’s 11,000 km network needs small vessels. Electrics cut emissions 80–100%, yet policy parity dooms them amid rising fuel costs.
- Global Lag Exposed: China/Norway electrify fleets with 25–40% premiums; India retreats while boasting “Make in India.” Aditya’s successors? Shelved.
- Hypocrisy Alert: FAME-II pours ₹10,000 Cr into land EVs; MNRE backs solar farms. Waterways get lip service, no cash.
This isn’t evolution—it’s the proverbial “one step forward, two steps back.”
Call to Action: Amend Schedule-IV Now
MoPSW must prioritize green shipping to hit 2047 goals:
- Remove ₹100 Cr slab for Specialized Vessels: Flat 25% for electric/hybrid/green (diesel at 15%).
- Grandfather SBFAP rates: Honor 20–30% for pre-2026 green contracts to 2036.
- EV Top-Up Fund: 5–10% extra via NSbM for series orders, plus shipbreaking credits (40% scrap value) tied to green builds.
- Stakeholder Input: Reconvene NITI/MNRE/MoPSW forums; fast-track amendments per SBFAS grievance mechanism (90-day IM resolution).
India can’t afford policy U-turns. Electric boats aren’t a niche—they’re the future of sustainable maritime trade. Amend now, or watch innovation sail away.
References
[1] – 2016 https://shipmin.gov.in/sites/default/files/Amended%20guidelines.pdf
[2] – 2023 https://shipmin.gov.in/sites/default/files/Amended%20Guidelines%20for%20SBFAP,%20August%202023_0.pdf
[3] – 2025 https://shipmin.gov.in/sites/default/files/Annexure%201%20SBFAS%20guidelines.pdf
Sandith Thandasherry 